December 2012 | Outsourcing Blog | BPO Industry Updates and Articles

The information technology sector presents two challenges for businesses. First, they are pressured by the growing market demand for innovative products and services. Also, there’s always the pressure in working within a specific budget, if not surpassing their projected sales.

Growth strategies used by large businesses in the IT sector

A post at ISG-One.com shares five strategies used by major businesses that were found to have helped them grow and achieve their goals:

Change should originate from the top.In order for organizations to have a sound structure during the transformation process, it should start from the core divisions such as the top management. This way, it is at a favourable position as it is where the decision-making process takes place.

Use the best possible operating model for your business.There are a few types of operating models in the market today. It is crucial that thought leaders and decision-makers select the one that will help drive growth across the entire business. It should be designed for the business and not a generic one that is often used as a template by some firms.

Closely monitor each activity.As the transformation is taking place, it is advisable that the cause and effect are noted down and closely monitored. This way, executives can review each process and gauge if they are getting anywhere near the goal. It will require a considerably large investment, but it will be rewarding in the long run.

Always consider the technical and architectural aspects of the transformation.Make sure that the IT transformation will work all throughout the organization or does not have adverse effects if integrated. This will help clearly define the path of a firm’s growth and also how it will be managed as it evolves.

Use the multi-sourcing delivery model.Multi-sourcing is anticipated to become the premier delivery model next year. It offers a lot of benefits and is said to be user-friendly. However, it should be integrated carefully to avoid disrupting ongoing operations.

10 Benefits of Outsourcing

Outsourcing has evolved rapidly over the years. It can now be accessed through several delivery models, and is already applicable to numerous types of services. But since the ways business executives manage operations have also changed, there are unpredictable instances that lead to problems between providers and clients.

BDaily.com lists 10 ways businesses can utilize outsourcing for their internal operations, as well as tips on how outsourcing relationships can be reinforced.

Always put your best foot forward.Having everything mapped out before the start of the operation helps both parties to clearly identify goals. This way, everything can be easily tracked, specifically the deliverables of the service provider.Create an agreement that works both ways.Contracts should have a margin for changes to prepare the operation for inevitable events. These should be able to protect and guide each party as the operation progresses.

Work as one.Providers should be treated as part of the internal team. However, the client side should be able to adapt to the changes brought about by the external team. This way, the team will be able to pull through no matter what challenges they face.Transparency is key.An open communication and open mind can help strengthen any outsourcing relationship. This way, concerns and suggestions can be easily addressed on a timely manner.

Have a mutual understanding.In line with having an open communication, parties should be on the same page when discussing crucial matters.

Be open to changes.As they say, change is the only constant thing in our lives, especially in business operations. Change can help drive innovation and productivity, and avoiding it can lead to slow business growth.

Learn to get along. Trust is crucial in any relationship. If each party commits that they will remain loyal and be confident with the strengths of each other, they will grow together as a team.

Step up above the rest.Providers should not only deliver, they should also strive to surpass their commitments specified in their contracts. This way, clients will see that they are real partners in the business.

Proper management of operations.Each party should monitor each other’s progress properly and maintain their focus so that they are not overdoing processes, which could result to problems in the future. Focus on one goal at a time.Focus on the business’ goal. Do whatever it takes to reach the objectives without straining the client-provider relationship.

Did the 2012 Outsourcinf Predictions live up to its name?

Cloud computing, offshore application development, and a different sales and marketing approach were all included in the 2012 outsourcing forecast created by CIO.com and outsourcing experts last year.

In an article posted at CIO.com, Stephanie Overby dissected the real score of those predictions as 2013 is fast approaching.

Exactly as predicted

Last year, it was prophesied that "2012 will be a mixed bag of M&A activity," which is how it turned out. There were minimal acquisitions and providers focused more on better deals with buyers. Smaller companies acquired by larger firms are poised to function internally and also through the services division.

Another is the prediction that outsourcing clients are more concerned with the output than just savings. Buyers turned to an outcomes-based business model because providers underperform and oversell.

Lastly, buyers are considering other regions that are feasible to outsource to, although it is still the leader globally due to the fact that it has a large workforce equipped with various skills and its world-class infrastructure.

Not quite exactly right

Experts believed that the cloud hype will eventually die down in 2012. Unfortunately, that wasn’t the case. Businesses were highly intrigued by the benefits of using the cloud for operations which in turn increased its hype. Although interest on the process is high, adoption and procurement remained low due to security issues. Moreover, infrastructure outsourcing, which was predicted to proliferate offshore, remained aground.

Talent gap was also predicted to fuel multiple cases of sales managers being let go. The problem seen was not all account executives and salespeople understood the products and services being sold.

Domestic app development growth is also listed down as a possibility last year, but the lack of infrastructure and expensive labor rates locally made it impossible to be done.

Things that are yet to come

Several predictions can be found somewhere in the middle of the outsourcing conundrum. Buyers are still unsure if they should purchase now, which process should they avail and from where.

Smaller deals were also found in this specific group of predictions. Furthermore, multisourcing will be highly deliberated as providers that landed smaller deals are looking to renew next year and attain much larger deals.

Businesses were seen in between inshore and offshore operations. There is no concrete way of identifying which delivery model they will further adopt. In addition to that, providers became flexible in deals and terms, but not all were open to those types of drastic changes.

Lastly, issues on IT security were anticipated to be the main concern in outsourcing. Although there were a lot of security-related challenges and issues that rocked the IT segment, only a small number was related to outsourcing.

Outsourcing Remains as a go-to Business Tool

Over the years, outsourcing was able to help numerous businesses all over the world. Even with the recent slowdown seen in the information technology (IT) outsourcing space, outsourcing is anticipated to remain resilient due to the following reasons posted at InformationWeek.com.Adoption of cloud technologyThere are several processes involved in outsourcing. These include network monitoring to third parties and hardware maintenance. Outsourcing enables businesses to rearrange internal structure and streamline processes, as noted in the 2012 State of IT Outsourcing survey done by InformationWeek.

Businesses can operate continuously and globallyApart from the benefits of tapping a global-graded workforce at a lower cost, the difference in time zones helps businesses operate round the clock. For instance, call centers that need to operate 24/7 outsource to countries like India and the Philippines to cover the night shift.

Outsourcing also broadens a business’ market reach, especially for countries that are currently growing and are seen as potential markets.

Working permit and visa challengesForeign workers who are crucial to the operation usually have to deal with H-1B visa and employment permit issues. These things usually take time to process and are difficult to come by since only 65,000 are allowed each year. This is simplified by outsourcing work overseas.

Skills mismatchSome positions are often difficult to fill, specifically the ones related to information technology. There are job openings, but candidates usually do not have the skills needed for those positions. Other emerging markets deal with mobile technology, big data analysis, and online processes. Unless there’s an upsurge of skilled workers, businesses will rely on available talent in other countries.Lessen expensesTransferring work to offshore outsourcing destinations that are experiencing vast economic growth is still highly considered by major companies as labor rates are relatively lower. Labor arbitrage is highly considered for high-valued services such as engineering and programming.

Businesses that outsource internal processes are often perceived as entities that are looking for budget solutions. Before, if a company wants to outsource a specific process, they acquire the services of a large multi-service outsourcing provider. Nowadays, it can be subcontracted to smaller, niche-driven service providers.

Benefits of subcontracting to a niche outsourcing provider

Niche outsourcing providers are focused on a specific service or segment of IT outsourcing and often times, they are smaller. It is said to be more efficient and effective and is a means to reduce excessive bureaucracy that is common in large providers. What makes niche providers attractive to clients is the fact that it is much easier to terminate a single contract than a bundled one, which is why they are believed to be more passionate with their work as the entire company’s reputation depends on their output. Moreover, a lost deal is detrimental to the success of a niche IT service provider, making each contract count.

Multi-sourcing companies execute several processes and are typically much larger in scale.They offer a complete package for businesses that are looking to outsource multiple processes. Most business owners think this route is easier as they would only need one contract instead of managing several service vendors. However, large outsourcing providers specialize in one or two segments and the rest are identified as "add-ons". This leads to inconsistency in the quality of their output and contract. Moreover, costs are harder to manage and track when dealing with a single provider that offers multiple services.

Advantages of Social Media Marketing to Businesses

Social media has evolved from being a mere avenue for personal engagement and connection to a means for businesses to broaden their reach, make new professional connections, and engage with their customers. One business strategy seen profusely used by marketing experts is outsourcing, which is aimed to shoulder additional work that can no longer be accommodated by an organization, or to simply cut overhead costs.

Alleli Aspili, SSG Specialist at Infinit Outsourcing, Inc., shares her insights about social media, its uses, and how companies maximize its benefits in an article posted at Business2Community.com.

Social media is used by organizations from different backgrounds and industries to improve and reinforce marketing strategies. For instance, it enables businesses and users to connect with other organizations and individuals who might be interested about the brand or product.

During its early stages, social media was only used to establish personal connections. But as businesses developed, they were able to use it to their advantage. Social media was able to help small and start-up businesses grow and reach potential customers in other areas. Soon after, business to business deals ensued which enriched the world of commerce. Strategies were made to attract more users and businesses developed more tools for other businesses.

As social media campaigns became more elaborate, companies started to outsource social media marketing so that implementing and monitoring social media campaigns are streamlined. However, a lot of people are not confident in doing so because they feel that the company’s brand and image should be managed by someone who knows the company fully.

When people hear the term social media marketing outsourcing, the first thing that most of them think about is an external provider that manages all replies, works on increasing the number of followers of an account, etc. In general, they feel that the social media profile is an external part of the brand or company.

However, not all social media marketing outsourcing providers do the same thing. Some have a template for delivering their services while others have a flexible services menu. Also, strategies still come from the client and the service provider will be responsible for executing tasks according to the standards and requirements of the client.

Why outsourcing is a feasible solution for basic and complex processes

A post at Business2Community.com lists seven reasons that make outsourcing a feasible solution for basic and complex processes such as accounting & payroll, HR, IT services and customer and tech support.

Proper redistribution of workloadOutsourcing enables business executives to focus more on the operation and critical procedures. It also frees up financial resources that can be used to help the company be more productive.

Perfect for SMBs and start-upsSince most small to medium businesses and start-ups face financial challenges during the early stages of the operation, outsourcing would be the most pertinent solution to ease financial burden by providing access to a more economical and skilled workforce.Reduction of overhead costsMost of the time, back office functions such as data entry are repetitive. This often leads to additional overhead costs for the company. By outsourcing, processes can be done efficiently at low costs.

Proper management and order of operationsDepending on the processes covered, outsourcing specialists have the necessary skills and can bring a better perspective in terms of management. This is ideal for companies that are currently having problems in finding the right people to handle a team - at a lower price.Build better relationshipsOver time, clients and service providers are able to establish good working relationships as they see good results of working with each other.

More flexible operationsProcesses and the number of employees can be customized according to the needs of the business. They can easily upgrade technologies used and increase the number of employees when needed.

For a seamless operationOutsourcing is an answer to business continuity. If ever something comes up, the company can count on their service provider to continue operations and provide support to the entire team.